Politics of fiscal consolidation in Europe: A comparative analysis

The aim of the article is to comparatively describe and explain consolidation measures and political decision-making processes in 14 European countries. The consolidation measures followed a similar pattern. Hiring and pay freeze occurred almost everywhere, whereas more radical cutback measures were introduced only in a limited number of countries. Cutback decision-making was not a one-off event, but consisted of a series of stages, beginning with temporary and small measures and gradually evolving into more serious cutbacks, sometimes arriving at targeted cuts and political priority-setting. The political decision-making was moderate and gradual rather than drastic and swift. Exceptions to this general pattern were the Baltic states as well as those European countries which received financial assistance on the condition of swift and severe cutbacks. Economic factors and supra-national influences primarily explained the size of consolidation measures, whereas domestic political factors turned out to have limited explanatory power. Points for practitioners: The comparative analysis of fiscal consolidation in 14 European countries showed that the consolidation measures followed a similar pattern. Hiring and pay freeze occurred almost everywhere, whereas more radical cutback measures were introduced only in the later stages of fiscal consolidation. At the beginning of the crisis, the severity and duration of the crisis were denied and the necessity for serious cutbacks was recognized only later. Exceptions to this general pattern were the Baltic States as well as those European countries which were bailed out on condition of swift and severecutbacks. The article argues that the political will and capacity of governments to take drastic and targeted measures based on political priority-setting is still a serious need.

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